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USDA grain stocks report friendly for corn; negative for wheat, beans
The USDA quarterly grain stocks report was friendly for corn but negative for wheat and beans as you can see from the tables that will post in the next comment. The wheat production numbers were mixed, as the tables indicate. The USDA did raise its 2008 bean production guess to 2.967 billion bushels but this was only an increase of 8 million bushels from their previous guess of 2.959 billion, not the almost 300 million bushel increase that some sources reported earlier.
The current call is steady corn, down 2-4 wheat and off 3-4 beans.
Today is first notice day for Oct meal and oil deliveries. There were no meal deliveries but 3300 oil was delivered with ADM putting out 1300. There were no large commercial stoppers. Crude oil is a bit higher while the $ is lower this am, a supportive combination for the grains. Grain prices were mostly a little higher overnight but this means little ahead of the USDA reports.
Chinese markets will close for their National Day holiday tomorrow and remain closed for a week, reopening Oct 9.
The CME Group announced variable storage rates will be implemented in wheat starting with the Sep 2010 contract. This change is being made to the wheat contract in an attempt to improve convergence, the coming together of the cash and futures price at expiration, something that hasn't been happening in wheat the last couple of years but is vital for successful hedging.
More much-needed rain is forecast early next week in Argentina's wheat belt but mostly in northern and eastern areas with the driest part of the belt, the southwest, likely to get the least amount of moisture. Cold temps in northern Chinese grain areas could damage late developing crops the next few days. Continued dry weather in northern New South Wales state, one of Australia's largest wheat growing states, will further stress wheat there with no rain in sight.
The US southwest winter wheat belt will see light, scattered rain tonight-tomorrow with more possible early next week. The delta will see more harvest delaying rain tomorrow-Friday and the 6-10 day calls for above normal rain, which could mean even more bean harvest delays ahead. The Midwest saw cold temps in the north this am and more are forecast tomorrow am, possibily causing some freeze damage to corn and beans. More chances for freeze damage exist in the forecast for next week, when these crops, especially corn, will still not be fully mature and safe from cold weather. Early harvest delays could result due to wet conditions with up to 2.5" of rain forecast in the west the next couple of days and up to 1.5" forecast in the east.
Higher grains start expected; Outside markets not friendly
A higher start is expected this am, roughly 3-5 wheat, 3-4 corn and 1 beans. Crude oil is lower while the $ is a little higher, not a friendly combination for the grains. There will probably be some evening up today ahead of the USDA wheat production and quarterly stocks reports tomorrow am.
The weekly crop progress report yesterday afternoon showed how far behind crop development remains with just 37% of the corn mature and safe from freezing temps vs 72% normally by this date. Beans are further along but still behind normal with 63% dropping leaves or mature vs 77% average. Harvesting is also well behind normal with only 5% of the beans and just 6% of the corn harvested vs 18% normal for both at this time. Spring wheat harvesting reached 94% vs 98% average while winter wheat planting is 36% complete against 39% average.
Egypt is in the market for optional origin wheat this am with results expected shortly before our 9:30 am central time opening. China's largest feed mill, the New Hope Group, bought 3000 tonnes of corn from Thailand. The president of New Hope Group said they will import more corn if conditions (meaning prices) are right. There has been some speculation recently about the possibility of China importing US corn due to their drought-reduced crop this season and this could still happen although most analysts think it is more likely next year than now. If and when China starts importing large amounts of corn this could have a very bullish impact on world and US corn prices so traders will continue watching the situation.
The delta will be dry for the next few days but more rain is still expected late this week, slowing bean harvesting again. The southwest winter wheat belt might have more showers the second half of the week but dry weather is forecast before and after that, allowing for more planting progress. It was cold this am in the northern Midwest and it will be cold the next few mornings in the north but freeze damage is expected to be light, if any. Rain could delay early corn and bean harvesting with up to 2.5" forecast in parts of the western Midwest the second half of the week while the eastern half of the belt will see up to 1" during this time.
Mixed but mostly lower grains start likely
A mixed but mostly lower start is likely this am: steady/better wheat, 1 lower corn and 7-10 down beans. The $, crude oil and the equity markets haven't moved enough so far today to impact the grains very much. Malaysian palm oil fell 83 ringgit today, a negative background influence for our bean oil market.
The USDA announced the sale of 225,000 tonnes of US beans to China this am, reflecting continued strong Chinese demand for US beans.
The USDA wheat production report and quarterly stocks report will be out Wednesday am. This is a major report for wheat but not for corn or beans, although that doesn't mean corn or beans can't respond strongly that morning, because they will if there is a significant surprise in the numbers. Here is what the trade is looking for: wheat stocks as of Sep 1 - 2.132 billion bushels; corn stocks 1.719 billion bushels and bean stocks 111 million bushels. All wheat production is expected to be 2.195 billion bushels with all winter wheat 1.543 billion bushels; hard red winter wheat 917 million bushels; soft red winter wheat 413 million bushels; white winter wheat 217 million bushels; spring wheat 552 million bushels and durum wheat 98 million bushels. Friday, Dec wheat took out strong underlying support on the charts in the low 550's and closed below this area. Expect overhead resistance now in the low 550's unless Dec can close over this area.
Beneficial rain fell in the wheat belt of Argentina over the weekend but the driest area in the southwest part of the belt had the least amount of rain and there is no rain in the forecast this week. There is a freeze threat tonight in southern New South Wales state in Australia but it probably won't get cold enough to do much, if any, damage to the young wheat plants.
Here in the US, the southwest winter wheat belt saw welcome, scattered weekend rain of up to .6". More is forecast the second half of the week. The 6-10 day calls for above normal rain in the northern part of the belt. The Midwest could see freezing temps tonight or tomorrow am in the far northwest part of the region. Otherwise there is no cold weather threat the next week or longer. Rain could become a problem in the Midwest if it delays early harvest efforts for corn or beans. Up to 1.5" of moisture is possible in the western half of the Midwest the second half of the week with rain in the east Thur-Fri possible also. The 6-10 day calls for above normal rain in the west but below normal rain in the east. The delta will be drier after today, allowing for some bean harvesting but rain is forecast again later in the week, which could further delay harvest progress.
Lower Grains Start Forecast
A lower start is forecast this am, around 1 in wheat and corn, 3 in beans. Crude oil, equities and the $ haven't changed enough to impact the grains much this am, although this could change later in the session.
The USDA announced the sale of 27,000 tonnes of US bean oil to an unknown destination, likely China or India. There isn't a lot of other news yet this am to influence prices. The grains have diverged in price so far this week with the bean complex lower since last Friday's close while corn and wheat are higher since then. Technically, it appears this trend will continue, judging by the daily charts.
A freeze threat continues in eastern Australian wheat areas late this weekend into early next week.
The US Midwest will remain mild until early next week, when temps will dip but any freeze threat is thought to be minimal at this time. Rain in the western half of the Midwest today and again next week could delay early corn and bean harvesting. The delta will see more bean harvest delaying rains today, followed by drier conditions. However, more unwelcome rain is possible next week.
Lower start in store for grains
A mostly lower start is in store for the grains this am, roughly 3-4 corn and 5-7 beans with steady/easier wheat. Crude oil is a little lower while the $ is a shade better, not enough to impact the grains very much but not a supportive combination either.
The Census Bureau August crush was 119.8 million bushels, about 1 million higher than expected. Oil stocks were 3.042 billion lbs, roughly 30 million lbs less than expected. Meal stocks were 316,000 short tons, about 40,000 short tons below trade ideas.
Weekly export sales were a little on the slow side for corn at 673,000 tonnes, but good to excellent for the rest: 507,000 tonnes of wheat; 1.152 million tonnes of beans; a total of 170,000 tonnes of meal (23,000 old crop and 147,000 new crop) and a total of 106,000 tonnes for oil (18,000 old crop and 88,000 new crop). China accounted for 655,000 tonnes of the bean sales.
The G20 meeting takes place today in Pittsburgh but it is doubtful anything said at this meeting will influence the grains today.
Pakistan's Food Ministry said their wheat harvest this year will total 24 million tonnes vs just 21 million last year. This large of a harvest could allow Pakistan to export about 2 million tonnes of wheat over the next year. The International Grains Council upped their world wheat production guess 4 million tonnes to 666 million due to higher yields and harvests in various countries. They also cut their world corn crop guess 2 million tonnes to 785 million. The USDA announced this am the sale of 20,000 tonnes of US bean oil to an unknown destination.
A possible freeze could occur in eastern Australia's wheat belt late this weekend or early next week, which could damage the young wheat crop there.
The US delta will see more unwelcome, bean harvest-delaying rain today and tomorrow but drier weather is forecast this weekend into early next week. The Midwest will see up to 1.5" unwelcome rain in the west the next couple of days which could slow early corn and bean harvest efforts there. Up to 1" of rain is forecast in the east during this time. The 6-10 day calls for above normal rain in the west, below in the east, which could cause further early harvest delays.
Lower grains start forecast by overnight losses
A lower start is forecast this am by overnight losses. The early call is 1 lower wheat, 3-5 down corn and 10-15 weaker beans. The $ is steady and crude oil only a little lower this am, not enough to influence grain prices at this time. In short, it is a slow news morning so the market will probably focus on the weather.
Yesterday afternoon the market rallied on the updated forecast calling for a possible freeze in the northwest part of the Midwest early next week but this am the latest forecast doesn't think the cold temps early next week will be cold enough to do much damage, if any, to corn and beans. This is the main reason prices fell overnight and are likely to remain under pressure this am.
The Federal Reserve Board's policy setting committee, the FOMC or Fed Open Market Committee, will announce any policy changes at 1:15 pm central time today. It is possible but unlikely this will directly impact the grain markets but if so it won't be until trading resumes Wednesday night. The G20 meeting starts today in Pittsburgh but here also it is unlikely anything said at this meeting will directly impact grain prices.
Much needed rain is possible this weekend in the dry areas of Argentina's wheat belt. There is a slight threat of damage from freezing temps the next 5-7 days in Heilongjiang, China's biggest bean growing province. Monsoon rains remain weaker than normal for this time in the season in India.
The southwest US saw widely scattered rain of up to 1" over the last 24 hours and more is possible today-Friday. More unwelcome, bean harvest delaying rain is forecast in the delta the next few days but drier weather is forecast this weekend into early next week. The Midwest will stay warm the next 5 days. Colder temps are still predicted early next week but it now appears little damage, if any, will result since temps are not expected to be cold enough.
Higher grains start indicated
A higher start is indicated this am following overnight gains in the grains as well as the lower $ and higher crude oil prices. The early call is 5-7 better wheat, 3-4 up in corn and 7-10 stronger beans.
The Weekly Crop Progress report yesterday afternoon showed corn is only 21% mature and safe from freezing temps compared with the average for this date of 55%. Beans dropping leaves, considered a sign of maturity for this crop, reached 40% vs 58% average. Spring wheat harvesting is catching up with 85% done vs 96% average. Winter wheat planting is on target with 24% done vs 25% average. There isn't a lot of other news to digest so far this am.
Hot and dry conditions will stress late developing crops in northwest and central India now that the monsoon has prematurely withdrawn from this region. The hot and dry weather will also make it more difficult for fall planted crops such as winter wheat. Continued cold temps are forecast in Heilongjiang, China's largest bean growing province, the next several days. This puts the bean crop there at risk of freeze damage.
The US southwest winter wheat belt saw scattered rain the last 24 hours, up to 1.5". More beneficial rain is forecast today through Friday. The northern plains spring wheat belt should enjoy dry harvest weather the next 7 days or so. The Midwest will stay warm the next 5-7 days. The longer term forecast sees above normal temps also except for a possible brief cold spell in the northwest part of the belt. The delta will see more unwelcome rain the next several days, further delaying early bean harvesting.
Outside markets, weather both bearish for grains
A lower start is likely this am, 2-3 wheat, 3-5 corn and 7-10 beans following overnight losses of a similar amount. Crude oil is under strong pressure, equities are lower and the $ is higher this am, a bearish combination for all the grains. There isn't a lot of fresh news outside of the weather this am and the outside markets this am, both of which are bearish so look for a lower start and continued weakness during the session.
The government of New South Wales, Australia's second largest wheat-producing state, is warning that their wheat crop could be cut 20% by drought conditions last month and this. Some rain is forecast this week but it could be a case of too little, too late to improve wheat crop prospects there. Cold temps late last week and forecast this week in Heilongjiang, China's largest bean growing province, might have damaged the bean crop but it is too early to say how much.
The US northern plains spring wheat belt should enjoy mostly favorable harvest weather the next 7 days, speeding up harvesting. The problem is the much lower than normal protein content of the crop, causing it to sell at a sharp discount to normal, higher-protein spring wheat. The southwest winter wheat belt benefited from scattered weekend rain and more is forecast there today and Thursday. The Midwest continues to enjoy warm temps with no freeze threat in sight the next 7 days or longer. The longer corn and beans develop this season, the larger the size of these crops is likely to become. This weighed heavily on these markets the latter part of last week and will do so again to start this week. The delta is expected to remain very wet the next week or so, delaying early bean harvesting. This helped provide some support for beans last week and could do so again this week, especially if China keeps buying large amounts of US beans after taking at least 300,000 tonnes last week.
Lower Grains Start Likely
Another mostly lower start is likely across the floor this am, down 3-5 in corn and beans but steady/easier. Crude oil is a little lower while the $ index is a little higher, not enough to have much influence on the grains but this combination certainly won't encourage any buying in the grains. There is very little fresh news this am outside of the weather. It is Friday and assuming we trade lower today due to the bearish weather forecast (see below) some traders might want to cover shorts ahead of the weekend as the forecast could change between today's close and Monday's opening. This might bring some support into the market late today, as we saw in beans late yesterday. Speaking of yesterday, many traders are still wondering why beans were so strong yesterday relative to corn but no clear cut explantion has yet emerged.
Up to .8" welcome rain has fallen the last few days in eastern Australian wheat areas and up to 2" more is forecast the first half of next week. This will greatly benefit the wheat crop in the east. The Indian monsoon continues to withdraw prematurely from northwest India, leaving crops in this area hot and dry. No hard freeze (28 degrees or lower for 2 hours or more) has been seen in most of the Canadian Prairies so far this month and none is currently forecast, allowing crops to continue late season development.
Good harvest conditions are forecast for the US northern plains spring wheat belt the next 7 days. Rain in the delta is possible the next couple of days and again next week, slowing early bean harvesting. The southwest winter wheat belt will be dry the next few days but rain is forecast the first half of next week. The Midwest will remain mostly warm and dry the next few days. Rain is predicted late this weekend into early next week in parts of the belt but there is no freeze threat in sight for as much as the next two weeks. If correct, this will allow corn and beans to complete developing and should ensure a larger USDA production guess in their next report, Oct 9. ---Vic Lespinasse
Cold weather threat to grains recedes
A lower start is indicated this am, around 3 wheat, 5 corn and 10 beans. Crude oil is a little lower and the $ a shade better this am, neither of which is supportive for the grains.
The main reason for the lower call is the lack of any cold weather threat next week or beyond, which would allow corn and beans to continue late development, very possibily resulting in record large harvests for both. Following the old saying that "big crops get bigger" many traders expect a higher USDA October crop production guess for corn and beans on Oct 9 IF we don't get an early season-ending freeze. The fear of an early freeze drove prices sharply higher Tuesday just as the reduced freeze threat in yesterday's forecast took prices lower and a lower start is expected this am as the freeze threat continues to recede in this morning's forecast. Of course, the weather, like the market, can be fickle and the forecast could easily change again by early next week or even tomorrow but for now the lack of any freezing temps in the near or longer term outlook should weigh on prices.
The vice president of COFCO, one of only two authorized Chinese corn exporters (Jilin is the other), estimated the Chinese corn crop at about 148 million tonnes vs last year's crop of 160 and recent estimates of as much as 165 million tonnes for this year. Drought is the reason for the much smaller crop. The COFCO vp also said he doesn't think China will need to import corn for several years as the country has huge reserve stocks, currently estimated at least 35 million tonnes.
Weekly Export Sales were out this am: 449,000 tonnes of wheat; 966,000 tonnes of corn; 489,000 tonnes of old crop beans and 215,000 tonnes of new crop beans; 43,000 tonnes old crop meal and 72,000 tonnes new crop meal and 30,000 tonnes old crop oil but minus 17,000 tonnes of new crop oil due to cancellations. Corn sales were better than expected with the rest roughly in line with trade estimates. The USDA announced this am the sale of 121,000 tonnes of US beans to China.
Very favorable dry harvest weather is predicted in the northern plains spring wheat belt the next 7 days. The southwest winter wheat belt had some isolated rain in the east yesterday. More scattered rain is forecast today-tomorrow. Better rain is predicted early next week. The Midwest will see mostly dry conditions and warm temps the rest of this week into the weekend. Light, scattered rain is forecast late this weekend-early next week, along with continued warm temps. ---Vic Lespinasse
Lower Grains Start Expected
A lower start is expected across the floor this am, similar to overnight losses. The early call is down 5-7 wheat, 2-4 corn and 10-15 beans. There is a widespread feeling the market overdid it to the upside yesterday and that the threat of freezing temps next week in the Midwest was exaggerated. Crude oil and the $ index are both lower this am, sending mixed signals to the grains. Malaysian palm oil jumped 91 ringgit today, a mildly supportive background feature for bean oil.
Farmers took advantage of yesterday's big price run up to sell a lot of corn and beans in the cash market. This big jump in farmer selling caused the cash market to weaken sharply since yesterday afternoon. Cash grain bids in most of the Midwest were down as much as 18 cents for corn and in at least one case (Cedar Rapids, Iowa) the cash bid for beans fell just over $1 a bushel, to 32 cents under the Nov futures price. This big jump in farmer selling of corn and beans could bring increased hedging pressure to these pits today, if it wasn't done already yesterday and overnight.
Widespread fear of a possible freeze in the northern part of the Midwest yesterday has been replaced with a more cautious approach this am. The forecast calls for continued mild temps across the belt the next 6 days. Temps are then predicted to fall sharply the second half of next week. The questions then are how low will temps fall and how far south will they reach? The weather models, as is often the case, disagree on the answers. Many weather forecasters this am think freezing temps probably won't extend as far south (and therefore not do as much damage to corn and beans) as feared by the market yesterday. Meteorologix Weather thinks the best chance for any freezing temps is in the northwest part of the Midwest Tue-Thur next week. This is why prices retreated to lower levels overnight and are expected to remain under pressure this am. Traders will be waiting and watching the updated weather forecast late this am closely as it will help determine the market's direction this afternoon.
Weekly Crop Progress: Corn, beans behind normal
A slightly higher start is expected this am, about 3 in wheat and beans, 5 in corn, similar to overnight gains. Crude oil is higher but so is the $, sending mixed signals to the grains.
Corn and beans development remains way behind normal, reflected by yesterday afternoon's Weekly Crop Progress report. Only 12% of the corn is mature and safe from a hard freeze (temps 28 degrees or lower for 2 or more hours) while just 17% of the beans are mature. Normally, 37% of the corn and 36% of the beans would be mature by this time in the season. The condition of the crops remains very good despite their late development. Corn is rated 69% good to excellent and beans are 68%, both unchanged from last week's ratings. Spring wheat harvesting remains behind normal with 69% of the crop harvested vs 92% average. Winter wheat planting is 13%, the same as average.
Egypt is in the market for wheat and results should be out shortly before our opening.
The Australian government estimated their wheat crop at 22.72 million tonnes vs their previous guess of 21.97 million in June. They put the canola crop at 1.72 million tonnes vs their June guess of 1.70 million. Interestingly, Australian Crop Forecasters, a private Australian analytical firm, cut their wheat production guess to 22 million tonnes vs 23.5 million last month, citing drought conditions in parts of eastern Australia, especially New South Wales. The Australian weather bureau said the southern oscillation index (soi), a measure of how severe any El Nino weather event is likely to become, increased to +1 for the 30 day period ending Sep 12. The previous soi was -2. The lower the soi, the stronger the El Nino weather pattern is likely to be so a higher and rising soi suggests El Nino will be relatively weak. This could be good news for Australian wheat prospects.
The forecast calls for much colder temps in the second half of next week in the Midwest, especially the northwest part of the belt. This could bring freezing temps into the Midwest, hurting corn and beans. Temps are forecast to remain mild for the next 6-7 days, however, enabling crops to continue developing. Mostly dry weather is forecast in the Midwest the next several days or longer, with the exception of the southeast part of the belt, where light, scattered rain is forecast this week. Scattered rain is forecast in the southwest winter wheat belt this week, where it is welcome.
Outside markets bearish for grains
Prices will be lower initially, 7-10 wheat and beans, 3-5 corn, following similar losses overnight. Malaysian palm oil fell 75 ringgit today, a negative background feature for our bean oil market. Equities and crude oil are lower while the $ index is higher, a bearish combination for all the grains.
The USDA announced this am the sale of 419,000 tonnes of US corn to Mexico, 113,000 tonnes of US beans to China and 110,000 tonnes of US beans to South Korea. There isn't much else in the way of fresh news this am to drive prices sharply in either direction but we will at least start lower due to the bearish weather picture.
Rain is not forecast for the drying out areas of New South Wales state in Australia until early next week. Only light, scattered rain is predicted in the driest part of Argentina's wheat belt, the southwest, the next 7 days, increasing the need for more moisture there soon.
There is no cold weather threat in the Midwest the next 7 days but colder temps are possible around 10 days from now, a possibility that the market will watch. The Midwest was generally dry over the weekend with warm temps. Continued mostly dry weather is forecast in the western half of the belt this week. The east will see scattered rain in the southern half of the region this week, dry elsewhere. Fairly widespread rain fell in the southwest winter wheat belt over the weekend, up to 3" in parts of Texas and Oklahoma, up to 1" elsewhere. Drier weather is forecast this week.
USDA Crop Report Summary
The Sep USDA crop report was mostly in line with trade expectations. Corn production was 12.954 billion bushels and beans were 3.245 billion. Corn's yield was estimated at 161.9 bushels per acre with beans 42.3. The corn carryover estimate for 2008-09 was 1.695 billion bushels and for 2009-10 it was 1.635 billion. Beans were 110 million bushels for 2008-09 and 220 million for 2009-10. Wheat was 743 million bushels for 2009-10. World carryover numbers were 186.6 million tonnes for wheat, up from 183.6 million estimated last month; corn was 139.1 million tonnes vs 141.5 million last month; beans were 50.5 million against 50.3 million last month; meal was 5.11 million tonnes vs 5.0 million last month and oil was 2.36 million tonnes vs 2.42 million last month. The USDA cut their guess on the size of China's 2009-10 corn crop to 160 million tonnes vs 162.5 million last month. Many private analysts think the crop is much smaller than this, perhaps as small as 150-155 million tonnes. The USDA also cut their guess on China's bean crop to 15 million tonnes vs their previous estimate of 15.4 million. The USDA left their estimate on the Argentine bean crop unchanged at 51 million tonnes for the 2009-10 crop year but raised their Brazilian bean guess to 62 million tonnes vs 60 million previously. They upped their EU wheat production guess to 138.5 million tonnes vs 135.3 estimated previously. They also cut their Argentine wheat guess to 8 million tonnes vs 8.5 million before and trimmed their Argentine corn crop estimate to 14 million tonnes from 15 million before.
Weekly export sales were also out this am and they were in line for oil but better than expected for everything else. Wheat was 551,000 tonnes this crop year and 85,000 tonnes next crop year; corn was 1.025 million tonnes; beans were 830,000 tonnes; meal was 15,000 tonnes old crop and 250,000 tonnes new crop; oil was 9500 tonnes old crop and 8000 tonnes new crop. (Traders were expecting wheat sales of (000 omitted) 300-500, corn 400-600, beans 300-500, meal 50-175 and oil 10-30.) Look for a steady/mixed start this am.
Traders await tomorrow's USDA report
A mixed start is currently indicated in the grains following mixed prices overnight. The early tentative call is steady wheat, 1 higher corn and 1-2 lower beans. Crude oil and equities are a bit higher while the $ is a little lower, providing modest background support for the grains. The main focus of the market today is likely to be evening up or positioning ahead of the big USDA Sep crop report tomorrow am. Unless something spectacular happens today, it will be forgotten as soon as the closing bell sounds at 1:15pm Central time with traders looking forward to tomorrow's report, not backward to today's session. It could be a relatively dull trade today except for the need to adjust positions ahead of tomorrow.
Weekly Export Sales were not out this am, delayed until tomorrow am due to Monday's holiday. Dec wheat hit its lowest level yesterday since April 2007 as large world wheat supplies continues to weigh on this market.
Monsoon rains continue to improve in India with the week ending Sep 9 seeing rain 21% above average.
The US Midwest was mostly dry the last 24 hours. It will continue on the dry side with warm temps the rest of this week into early next week, when light, scattered rain is possible. The 6-10 day calls for warmer than normal temps with above normal rain in the east, below normal rain in the west. Light rain is forecast in the southwest winter wheat belt tomorrow through the weekend, which will be welcome. The 6-10 day calls for warmer than usual temps and below normal rain. The lack of any freezing temps in the Midwestern forecast remains the main bearish influence for corn and beans. ---Vic Lespinasse
Preliminary USDA report estimates
A lower start is expected in all pits this am, 5-7 wheat, 2-4 corn and 7-10 beans despite slightly higher crude oil and equities as well as a slightly lower $.
The Weekly Crop Progress report yesterday afternoon showed corn's good to excellent ratings unchanged from last week at 69% while beans fell 1% to 68% and spring wheat declined 1% to 74%. Spring wheat harvesting remains well behind normal at 58% complete vs 88% average. Winter wheat planting just started and is 5% done, the same as the average. Development of the corn and bean crops remains well behind normal: corn in the dent stage is only 50% vs 75% average, in the dough stage at 86% vs 94% average and mature at just 8% vs 23% average. Beans dropping leaves, a sign of maturity, are only 7% vs 18% average.
Stats Canada estimated Canadian grain stocks as of July 31 this am: All wheat 6.56 million tonnes; durum wheat 1.9 million; oats 1.5 million; canola 1.66 million and barley 2.8 million. Durum, canola and barley were a little higher than expected but not enough to impact prices significantly.
The China National Grain and Oilseeds Information Center (CNGOIC), China's official government-linked think tank, cut its Chinese corn crop guess 1 million tonnes from last month to 165.5 million tonnes due to drought. Other analysts have cut their Chinese corn guesses much more severely. We will see what the USDA estimates the size of this crop Friday am. CNGOIC also cut their bean crop guess 500,000 tonnes vs last month to 14.5 million tonnes. They also cut their wheat crop guess to 114.95 million tonnes vs 115.5 million last month but raised their paddy rice guess to 194.7 vs 193.5 million last month. China auctioned 29,000 tonnes of beans today out of a total of 500,000 tonnes offered.
EU wheat set a new contract low again today, the 3rd trading day in a row wheat has done this. Ample world supplies are behind the ongoing fall in world wheat prices. US wheat futures here in Chicago made new contract lows again yesterday also. The USDA announced this am the sale of 110,000 tonnes of US beans to China for the 2009-10 crop year.
Here are the preliminary trade averages for the USDA Sep crop report Friday am: corn production 12.932 billion bushels with a yield of 161.5 bushels per acre; beans 3.256 billion bushels with a 42.4 yield. Ending stocks for the 2008-09 crop year are guessed at 1.712 billion bushels for corn and 102 million bushels for beans; for the 2009-10 crop year, 1.768 billion bushels for corn, 226 million bushels for beans and 769 million bushels for wheat. Many traders think whatever production numbers the USDA puts out this time, if we don't get an early freeze the numbers will be even bigger next month, using the old adage "big crops get bigger" over time.
Mostly dry weather is forecast in Argentine and Australian wheat areas the next 7 days or so, increasing the need for additional moisture in these areas again soon. Only light, isolated rain is predicted in the Midwest US the rest of this week into early next week along with mild temps. There is no threat currently of cold temps. The 6-10 day calls for warmer and wetter than usual conditions, a bearish forecast as far as corn and bean prices are concerned. ---Vic Lespinasse
Steady/Higher Grains Start Expected
A steady/higher start is indicated this am, steady/better wheat and corn, 10-15 up in beans. Crude oil, gold and equities are higher while the $ is lower, a bullish combination for all the grains. The big USDA Sep crop report is Friday am. I will have all the trade averages either later today or tomorrow am.
Deliveries totaled 1200 wheat, 1850 oil and 70 corn with no beans or meal yet.
France's Agricultural Ministy upped its 2009 soft wheat production guess 1.2 million tonnes from last month to 37.3 million tonnes.
The director of India's Meteorological Dep't said the monsoon rains are now forecast to be only 15-18% below normal for the June-Sep period vs previous expectations of a 20% shortfall due to recent improvement in monsoon rains. Very much needed rain fell in the driest parts of Argentina's wheat belt over the weekend, up to 1.5" with good coverage. There is a freeze threat in the northern Canadian Prairies this week but any damage should be limited. Warmer temps are forecast afterward. Very beneficial rain fell late last week and over the weekend in northern New South Wales state in Australia, where it was badly needed.
Here in the US Midwest, there is no cold weather threat the next 7-10 days. The western half of the belt was mostly dry over the weekend but up to 1 1/4" fell in parts of the east during this time. This week will see generally light, scattered rain in parts of the belt with mild temps. The 6-10 day calls for above normal temps.
There will be a seminar broadcast online from the CME at 2pm US Central time tomorrow but you must register to watch or send in questions. Go to www.cmegroup.com/grainseminar to register.
Evening Up of Grain Positions Likely Ahead of Holiday
A mostly steady/easier start is expected this am, 1-2 lower wheat and corn, steady/mixed beans. There were no deliveries in beans or meal again this am. 1900 wheat, 146 corn and 2100 oil were put out. The outside markets are only slightly changed this am, not enough to impact grain prices much either way.
A lot of evening up is likely today ahead of the 3 day holiday weekend, especially late in the session. The big USDA Sep crop report will be out one week from today. I will have all the trade estimates by early next week.
Argentine farmers strike is scheduled to end tonight but more protests are likely in the future.
Much needed rain of up to .6" fell in the dry parts of eastern Australia's wheat belt the last 24 hours and more of the same is forecast today. Still more rain will be needed again soon to end drought conditions in this area, northern New South Wales state. There is a freeze threat in northern parts of the Canadian prairies early next week but any damage should be limited.
The US Midwest will be mostly mild and dry the next several days, through early next week. The 6-10 day calls for warm temps but there is a chance for much colder weather the weekend of Sep 11-13, which the market will watch closely. ---Vic Lespinasse
Higher Grains Start Expected
A higher start is expected this am, roughly 2-3 wheat, 1-2 corn and 10-12 beans. The outside markets are slightly supportive for the grains this am with crude oil and equities a little higher while the $ is a little lower. The market added a cold weather premium last week to prices, especially beans, but took this premium out so far this week due to the lack of any cold weather threat. Now, we might be in a state of equlibrium for a short period as the market watches the developing weather. Prices could swing back and forth on either side of unchanged as a result.
Weekly export sales were in line for wheat at 406,000 tonnes, meal at 19,000 tonnes old crop and 113,000 tonnes new crop, and oil at 24,000 tonnes. Corn sales were at the high end of trade ideas with 345,000 tonnes of old crop sales and 594,000 tonnes of new crop sales. Bean sales were very good, minus 59,000 tonnes old crop due to cancellations but 1.108 million tonnes of new crop sales.
The USDA this am announced the sale of 110,000 tonnes of US beans to China and the sale of 174,000 tonnes of US corn to an unknown destination. Deliveries this am totaled 3800 wheat, 2500 oil and 166 corn.
The four main Argentine farmers unions said today they would not extend the strike against the government past tomorrow but they didn't rule out future protests.
Informa comes out this am at 10:30 US Central time with their Sep crop guesses. The CFTC will start putting out its expanded Commitment of Traders reports tomorrow afternoon, which will contain a lot more information than the old version.
The monsoon rains in India have improved with rainfall for the week ended Sep 2 close to normal while rain in the week ended Aug 25 was only 5% below normal. Improved rain is also forecast to continue in China's main grain growing areas. Light rain is forecast in the dry parts of Australia's wheat belt the next two days but more will be needed there again soon. There is a chance of a freeze in the northern Canadian Praries early next week which will also be closely watched.
The US Midwest will see a few light, scattered showers over the next 5 days or so with mild temps. The 6-10 day outlook has a turn to cooler temps late in the period which the market will watch closely to see if this develops into a threat as corn and beans will still be vulnerable at that time. ---Vic Lespinasse
A Lower Start is likely this AM...
A lower start is likely this am, roughly 2 in wheat and corn, 5-10 in beans. The outside markets are mixed with only small changes currently and not expected to influence the grains unless they move sharply in either direction from here. The first corn deliveries of the month were seen this am, 200 lots to Jul 13. There were 4400 wheat and 2900 oil to Sep 1 but still no beans or meal.
China auctioned only 10,600 tonnes of beans today out of 500,000 tonnes offered. The government announced they will subsidize crushers in Heilongjiang province, the largest bean producing province in the country, for 2 million tonnes of beans. However, due to the fall in bean prices, the subsidy, 200 yuan, isn't enough as it is still cheaper to import beans than buy them at the government auctions.
FC Stone estimated the US corn crop at 13.02 billion bushels with a yield of 162.7 bushels per acre. There bean guess was 3.266 billion bushels with a yield of 42.6. These estimates were considered bearish for prices as the USDA currently is 12.761 billion bushels for corn with a yield of 159.5 and 3.199 billion beans with a yield of 41.7. The Sep USDA estimates will be out the morning of Sep 11. Most traders expect the USDA to raise their guesses in this report due to the ongoing very favorable weather over the last month in most of the belt. There is an old saying that big crops get bigger, small crops get smaller. IF we don't have an early season ending freeze, it is likely the Sep USDA report will be larger than the August estimates and the October numbers will be larger than the Sep guesses, which would be a major bearish influence on prices long term. The trouble for the bulls is the lack of any fresh bullish news and the ongoing bearish weather outlook. Of course, this could all change very quickly should the forecast change and cold temps threaten but for now no cold temps are in sight. The market added a cold weather premium last week to prices, especially beans, but so far this week it is taking this premium out.
The Australian Weather Bureau sees signs El Nino is moderating but not ending so this could turn out to be a mild El Nino year with less weather damage than previously feared. At least some rain is forecast in the dry areas of eastern Australia later this week. The Indian monsoon appears to be improving somewhat with more beneficial rain forecast in parts of the country the next several days.
The western US Midwest will see scattered rain today-tomorrow, up to 1.5" in the western part of the region. Dry weather is forecast Fri-Mon. The eastern half of the Midwest will see mostly dry conditions the rest of the week with rain possible early next week. The 6-10 day calls for above normal temps.
Slightly lower start is expected…
A slightly lower start is expected, 2-4 in wheat, corn and beans, similar to overnight losses. There were no corn, bean or meal deliveries again this am. 3900 wheat and 2900 oil were delivered with Aug 31 the date. The weekly crop progress report yesterday afternoon showed beans good to excellent rating unchanged at 69%. Corn fell 1% to 69% but spring wheat improved 3% to 75%. Spring wheat harvesting remains way behind normal, 38% complete vs 79% average. Corn in the dent stage reached only 32% vs 60% average and maturity is only 5% vs 13% average. Beans setting pods are 93% vs 96% average. China auctioned 1.92 million tonnes of corn today out of a total offering of 2.5 million. They will try to auction 500,000 tonnes of beans tomorrow but probably won’t sell very many, if any, until they start subsidizing crushers or prices rise sharply from here. Oil World, the widely followed analytical firm, estimates Argentina will produce a bean crop of 52 million tonnes in 2010 vs just 32.2 million this year. Oil World predicts Brazil will harvest a 62 million tonne bean crop in 2010 vs only 57.6 million this year. South American beans were hurt by adverse weather this year, especially in Argentina. Crude oil is about unchanged while the $ index is slightly higher, not enough to influence our grain market this am. The USDA reported this am Mexico bought 120,000 tonnes of US corn for the 2009-10 crop year. A Chinese government backed website is reporting bean production in Heilongjiang province, the largest bean growing province in the country, will be cut by 1/3 due to drought. Better rains recently in China’s main grain growing areas should halt further crop losses from earlier drought conditions. The same is true in India, where monsoon rains have improved lately and more of the same is forecast for the near term. There is a growing need for rain in parts of eastern Australia’s wheat belt and moisture is possible Thur-Fri. The US midwest will stay generally dry this week with mild temps. Some rain is possible over the weekend.
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